1-month chart from Yahoo Finance
Tesla’s stock performance launched like a NASA spaceship after its stellar 1st quarter 10-Q performance that was released on May 10th 2013. Tesla’s recent 1st quarter net revenues skyrocketed in comparison to its 2012 totals. Additionally, Tesla posted its first-ever quarterly profit.
In three market sessions, Tesla rose from $69.65 to a 52 week high of $97.12.
I have been waiting a long time (mostly in vain) for the electric car market to finally take shape and present a game-changing challenge that will alter the auto industry as well as the alternative energy sector.
Could this be the game changer I have been hoping for?
Tesla have now outpaced Mitsubishi Motors and Fiat in terms of market value. Tesla has seen it’s fair share of struggles in its decade-long history of existence. In 2008, Tesla CEO Elon Musk had to dip into his own personal wealth in order to keep the firm alive.
Just recently, Total U.S electric car sales eclipsed the 100,000 milestone this month. This milestone was predicted by the advocacy group Plug In America. This milestone was partially due to the performance of the Tesla Model S. It is currently outpacing the Mercedes Benz S-Class and the BMW 7 series and Audi A8.
As it stands, the electric vehicle market has approached a growth of nearly 48% for 2013. Total electric car sales for the first four months of 2013 has more than doubled the total for the first four months of 2012. There seems to be some semblance of momentum for the electric car. However, there is still a long way to go.
The milestone of 100,000 electric vehicles is only 10% of the goal of 1,000,000 vehicles that President Obama envisioned would occur by 2015.
Ford sold as many of their F-Series trucks in a day then the combined sales of the Tesla S and the Nissan Leaf during the first quarter of 2013. Electric car sales have accounted for less than 1% of total car sales in the first four months.
While it may keep many away from the gas pump, it continues to be seen as a luxury item that is out of the mainstream and out of the price range for many individuals.
Certainly, the mass appeal will not be reached anytime soon if electric cars such as the Tesla continue to be sold at a price of $70,000 per year.
However, Tesla has clearly made the significant inroads in a very difficult terrain. The Tesla S Sedan has been given an outstanding score by Consumer Reports, thus reliability is not an issue. Tesla’s current success may be the trigger that could finally get the electric car industry going.
Sometimes things may not be what they seem.
Today marks the first time that the Dow Jones has closed over 15000 in its history. Home Sales are up over 10% from a year ago and there is certainly plenty of evidence to suggest that the Bulls should be on parade.
Having said this, there is definitely a growing disconnect between the eye-catching record results of the Dow Jones and S&P 500 and the less than stellar results of unemployment and GDP. Certainly, we would not be seeing these stellar market results if the Federal Reserve had interest rates at 3-4%.
As wonderful as this recovery may seem, this is primarily a result of the Federal Reserve keeping interest rates at record lows in order to keep from unleashing the harsh reality of where this economy really stands. Certainly, the economy is recovering slowly, but this recovery is clearly Fed-influenced.
Certainly, I do not blame the Federal Reserve for their actions in order to stimulate the economy in the midst of this recession.
However, this recovery is the equivalent of a Kool-Aid drink that is significantly diluted with water. It may look like Kool-Aid, but it is certainly does not taste like Kool-Aid.
This video provides a short synopsis of the failures in our country when it comes to personal finance. We are second to none when it comes to providing productivity and impact that provides great value to corporations and organizations.
Yet, we have clearly not done when it comes to paying ourselves, building wealth and securing our own financial future. It is time for a change.
I have posted a new category of a biblically-based financial course that I’m currently taking called “Financial Peace University”.
Financial Peace University approaches budgeting, saving and tackling debt from a biblical perspective. I have also posted some links to key budgeting tools and steps from the program. The steps and changes are easy to implement. The hard part is the change in one’s mindset and behavior from the current approach that is being taken towards their personal finances.
We can certainly do better than this.
This is a lively debate on BloombergTV between Bloomberg View columnist Clive Crook and former Reagan budget director David Stockman over the Fed’s current interest rate policy.
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Corn is one of five other commodities that have become bearish due to the increasing likelihood that the rising pace of supply will surpass demand. Corn futures dramatically dropped by 7.6% yesterday on the Chicago Board of Trade. This was the biggest decline since the final year of the Reagan Administration.
The S&P GSCI Agriculture Index has fallen 7.1% in 2013. The index is a measure of eight key raw materials, including corn. Overall, the index’s overall number has fallen by over $115 since July 20th 2012.
On the other hand, declining corn prices may be welcome news for establishments such as Buffalo Wild Wings in their battle to deal with rising chicken costs.
Buffalo Wild Wings (BWLD) is one of the official sponsors of the NCAA basketball tournament: one of my favorite sports pastimes ever. Certainly, we have been bombarded with advertisements reminding us that they are “the official hangout of March Madness”.
If I were to fill out a March Madness bracket that was full of potential equities that are a must buy at the moment, Buffalo Wild Wings would be a Final Four pick.
A month ago, Buffalo Wild Wings. Inc reported solid results for the fourth quarter of 2012. Net revenue increased by nearly 38% while net income rose 22.3%from the same period in 2011. The aforementioned result was sparked by strong same store sales as well as the addition of over 60 firm-owned restaurants. Additionally, company-owned sales grew by nearly 40% over the course of the quarter. Overall, Buffalo Wild Wings.Inc’s annual net income increased by nearly 14% in 2012.
A major obstacle that Buffalo Wild Wings Inc has to contend with is the historic prices of chicken wings. The National Chicken Council predicted that America would chow down 1.23 billion chicken wings during this year’s Super Bowl. This would represent a 1% decline from last year’s Super Bowl in which my beloved New York Giants won it all.
While demand for chickens increased last year, the U.S reduced its production of chickens by 1% from its 2011 total. A recent poultry report by the U.S Department of Agriculture stated that prices for whole chickens increased by 21% while chicken wing prices rose by 26% in December 2012 as opposed to December 2011. Industry insiders have blamed this on the dramatic rise in corn prices, especially during the summer of 2012. Corn is the primary source of chicken feed for chickens.
Higher chicken wing prices caused an increase in food costs for Buffalo Wild Wings Inc. Food costs increased by just over 2 and a half percent in 2012 primarily due to the fact that there was a 70% increase in the company’s cost per wing. This also caused a slight dip in their return on assets and return on equity when compared to 2011.
In response to elevated food costs, Buffalo Wild Wings has modified their long-held way that they have sold wings to their customers. Instead of accentuating the number of chicken wings in an order, the chain will place an increased emphasis on the weight of the wings in their menus. From a marketing standpoint, Chief Executive Sally Smith emphasized the importance of highlighting their wings as a high-quality product.
Buffalo Wild Wings plans to expand in 2013 through the creation of 60 company-owned restaurants and 45 Buffalo Wild Wings franchises. With 900+ locations, it is 3/5th of the way from it’s ultimate goal of 1500 locations.
According to Morningstar, the price multiples of Buffalo Wild Wings indicate that they are undervalued as compared to the industry average. Therefore, they may still be room for growth.
In addition, Buffalo Wild Wings has planned to invest in small restaurant chains that are actively using emerging restaurant concepts. Last week, Buffalo Wild Wings took a minority ownership stake in a small California pizza chain by the name of Pizza Rev. With only one year of existence, Pizza Rev offers a unique customer experience as it allows the customer to craft their own pizza. Consumers can select their own sauce as well as a limitless choice of toppings at a fixed price of 7.95 per pizza. The pizza is placed in a stone-hearth oven and take less than three minutes to make. Thus, the firm hopes that it has invested in a chain that is at the starting point of a major surge in the restaurant industry.
The Pizza Rev concept is similar to the choice that customers of Buffalo Wild Wings Inc. have when it comes to chicken wings. Consumers can choose 16 signature sauces and 5 seasonings to put on their wings.
Buffalo Wild Wings Inc. is set to make a major push in terms of international expansion. The chain expanded into Canada in 2011 and has reached agreements with three Mexican franchise groups to open restaurants in Mexico. Furthermore, the chain plans to open twenty-two restaurants in six Middle Eastern countries and four restaurants in Puerto Rico.
This stock may neither be front and center like the Louisville Cardinals nor a diamond in the rough such as the Florida Gulf Coast University Eagles. Nevertheless, it is an emerging player in the restaurant industry that can no longer be ignored.
Especially in the month of March Madness.
